Crude oil prices continue to rise

February 28, 2008 8:44:38 PM PST
The price of oil is one of the bell-weathers experts use to track the economy.

From $65-dollars a barrel in April, oil rose steadily to almost $78 dollars in august, then $88 dollars in December.

Oil flirted with the $100 dollar price-point in January, but topped that mark on Thursday -- closing at $102.59 a barrel.

Oil price shocks have a broad and serious impact on the economy. The country is trying to skirt a recession. But higher oil prices mean consumers will be spending more at the pump, not for goods and services.

Consumers are well attuned to the reality that higher crude oil prices will be hitting them soon at the pump.

"I think as far as the economy goes, it stresses a lot of peoples' pocketbooks from going out, spending money on other items, having to spend probably two-thirds of your income for gas now. It's a little tough," said gas station customer Dave Steinert.

Taxi drivers already anticipate making less money.

"I go home with $45-$50 less a day or $50 less in my pocket because it goes in my gas tank," said DeSoto taxi driver Olivo Dallagiacomo.

ABC7's David Louie: "Can you keep making a living that way?"

"I make less," said Dallagiacomo.

On Thursday, President Bush suggested conservation and renewable energy as ways to ease the pain of higher oil prices.

He also suggested a third solution.

"We need to be finding more oil and gas at home if we're worried about becoming dependent on oil overseas. The more oil we find at home, the better off we're going to be in terms of the short run," said President Bush.

The president's idea didn't sit well with the Sierra Club.

"Drilling is just not part of the solution. There's not enough oil to meet our domestic energy needs and frankly, if you already know you're addicted to oil, you should look for ways to break that oil addiction, not look for more of the actual drug," said Orli Cotel from the Sierra Club.

Transit agencies, such as Muni, have embraced alternate energy sources.

Just over half of Muni's fleet of 1,013 vehicles is electric. There are 460 buses that run on diesel. Eighty-six of them are hybrids.

Still, Muni is hit just as hard as consumers when oil prices soar. Pricing is done on a week basis.

"Right now we're spending just about a million dollars a month on diesel fuel, and we're budgeting a little bit more -- $16 million -- for next year to account for some potential increased costs," said Muni spokesman Judson True.

Keep in mind that oil is traded in dollars. With the Euro, the pound and other currencies considerably stronger than the dollar, that makes oil cheaper in other parts of the world.

That's a competitive advantage for Europeans, and a disadvantage for us.